The New York Times: S.E.C. Approves Rule on C.E.O. Pay Ratio

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The chief executive of General Electric raked in a $37.3 million pay package last year, a large sum by any standard.

But how much larger was it than the average pay of the 305,000 employees who helped General Electric earn billions in profits that year? The industrial giant did not disclose that comparison, and corporate America rarely reveals how the compensation of the chief executive stacks up against that of the workers in the ranks below.

That will soon change.

After a long delay and plenty of resistance from corporations, the Securities and Exchange Commission approved in a 3-to-2 vote on Wednesday a rule that would require most public companies to regularly reveal the ratio of the chief executive’s pay to that of the average employee.

Representatives of corporations were quick to assail the new rule, which will start to take effect in 2017, saying that it was misleading, costly to put into practice and intended to shame companies into paying executives less.

But the ratio, cropping up every year in audited financial statements, could stoke and perhaps even inform a debate over income inequality that has intensified in recent years as the wages of top earners have grown far more quickly than anyone else’s.

Fifty years ago, chief executives were paid roughly 20 times as much as their employees, compared with nearly 300 times in 2013, according to an analysis last year by the Economic Policy Institute.